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Can Machine Learning Catch the COVID-19 Recession?

Philippe Goulet Coulombe, Massimiliano Marcellino, Dalibor Stevanovic

arXiv 1 Mar 2021 · Econometrics · publishedNational Institute Economic Review (2021) · 1 citations (OpenAlex)

arXiv:2103.01201 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Based on evidence gathered from a newly built large macroeconomic data set for the UK, labeled UK-MD and comparable to similar datasets for the US and Canada, it seems the most promising avenue for forecasting during the pandemic is to allow for general forms of nonlinearity by using machine learning (ML) methods. But not all nonlinear ML methods are alike. For instance, some do not allow to extrapolate (like regular trees and forests) and some do (when complemented with linear dynamic components). This and other crucial aspects of ML-based forecasting in unprecedented times are studied in an extensive pseudo-out-of-sample exercise.

Citation extraction

37
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appendix boundary found by appendix_command · 72% of the source is main text. Read the extracted text to check this.

Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1McCracken, M. W. and Ng, S (2016) FRED-MD: A monthly database for macroeconomic research1.00073100%
2Stock, J. H. and Watson, M. W (2002) Macroeconomic forecasting using diffusion indexes1.00065100%
3Goulet Coulombe, P., Leroux, M., Stevanovic, D., and Surprenant, S (2019) How is machine learning useful for macroeconomic forecasting? self1.00053100%
4Goulet Coulombe, P (2020) The macroeconomy as a random forest1.00053100%
5Goulet Coulombe, P., Leroux, M., Stevanovic, D., and Surprenant, S (2020) Macroeconomic data transformations matter self0.92843100%
6Stock, J. H. and Watson, M. W (2002) Forecasting using principal components from a large number of predictors0.92843100%
7Kotchoni, R., Leroux, M., and Stevanovic, D (2019) Macroeconomic forecast accuracy in a data-rich environment self0.84333100%
8McCracken, M. and Ng, S (2020) FRED-QD: A quarterly database for macroeconomic research0.84333100%
9Fortin-Gagnon, O., Leroux, M., Stevanovic, D., and Surprenant, S (2018) A large canadian database for macroeconomic analysis self0.81142100%
10Bai, J. and Ng, S (2002) Determining the number of factors in approximate factor models0.58531100%

Showing the top 10 of 39 scored citations.

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7Forecasting US Inflation Using Bayesian Nonparametric Models0.40511
8Bayesian Nonlinear Regression using Sums of Simple Functions0.40511
9At-Risk Transformation for U.S. Recession Prediction $ $0.40511
10The Macroeconomy as a Random Forest0.00011